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Bread price hike expected due to pressure on global wheat supply

Wednesday 16 March 2022 | Written by Matthew Littlewood | Published in Economy, National

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Bread price hike expected due to pressure on global wheat supply
Avarua Bakery general manager Kervin Aroita says there will be increases in the cost of bread over the coming months. MATTHEW LITTLE/22031501

Consumers could face major increases to the price of bread, as bakeries deal with the flow-on effects of supply chain issues from Covid-19 and Russia’s conflict with Ukraine.

Avarua Bakery general manager Kervin Aroita said it would be the biggest increase to wheat prices in more than a year, and he had very little choice but to pass on the cost to consumers.

“There’s not much I can do about it,” Aroita said.

“The good news is that we have enough supply to keep the prices steady until April, but after that, they will rise.”

Aroita said he expected the increase to wheat and flour prices to arrive sometime in April, with the increase likely to be as high as 10 per cent.

Aroita said freight costs were also affecting bakers in the Cook Islands.

“We’re paying significantly more for freight, the price of a 20-tonne container from New Zealand has gone from $5200 to $6000 in recent times,” he said.

“Everything is pretty expensive.”

Aroita said there were several reasons for the pending increase in wheat prices.

They included restriction of supply with Australia and New Zealand, the conflict between Russian and Ukraine - who collectively account for 30 per cent of global wheat exports - and increased costs due to Covid-19.

Aroita said this was not the first time he had faced supply issues.

“It got pretty bad back in 2008,” he said.

Aroita said the family-owned business was looking at various ways to help soften some of the increase in prices, including moving to wholesale and decreasing the size of loafs to something more in line with New Zealand.

“But that would lead to increased equipment costs, so it’s all a bit of a challenge.”

Aroita advised consumers to consider other options rather than just going for fresh same day bread.

“Two-day old bread is still good bread,” Aroita said.

VMV bakery co-owner Victoria Dearlove said she did not yet know how big the increase in prices for wheat for their operations would be, but it came at a time when they were dealing with increases in a range of products.

“Butter went up 15 per cent for us last week, so if the price of wheat and bread increases anything near that amount, it’s a double whammy,” Dearlove said.

“But it’s not just supply costs, pretty much everything is increasing across the board. We will have to tackle increases in power and eventually fuel as well.”

Dearlove said it was inevitable that these increases would have to be passed on to the consumer.

“We just have to wait and see. We haven’t had the chance to look at our response to increased wheat prices, because we simply don’t know how big the increase will be.”

Cook Islands Trading Company (CITC) general manager Gaye Whitta said there were a lot of hidden costs, such as shipping costs, that were not passed on to the consumer.

“I think we’ve all got to be mindful of increased product costs,” Whitta said.

She said the past year or so had been tough for consumers, and reinforced the need to “tighten our belts”.

“We all have to think of ways to better use our money.”

Aroita said it was a significant issue for the people of the Cook Islands.

“Bread is a staple food for our people,” he said.